ETF Insider: Bull Run Continues, Short Trade Gets Stopped Out

ETF Database

May 18, 2013, 9:00 AM

The party continued on Wall Street this past week as bullish euphoria carried equity indexes further into uncharted territory; the S&P 500 Index cruised past the 1,650 level while the Dow Jones Industrial Average settled above the 15,300 mark. On the data front, potential signs of weakening fundamentals began to resurface after industrial production and weekly jobless claims came in below expectations, although these releases barely put a minor dent in the bulls' confidence [see also The Cheapest ETF For Every Investment Objective].

ETF Insider Recommendations

Our only pick for this week resulted in a small loss after our stop-loss was triggered following the continuation of the bull run on Wall Street.

This defensive recommendation was mistimed, despite our fundamental analysis being correct. Industrial production data missed the mark this week, but both the industrial and basic materials sectors ignored this headline and continued their ascent. XLB failed to turned lower and triggered our stop-loss on Wednesday, forcing us to incur a small loss that turned out for the best when considering that this ETF rallied into the close on Friday afternoon.

XLU Update

We contemplated taking profits on this recommendation since it already hit our profit target of $40 a share; however, we decided to keep it open since XLU appears to be gearing up for another run higher judging by its rising support levels since enduring a correction in early May. We will be quick to lock-in profits next week should broad selling pressures resurface.

Foreign equity markets were a bit shaky this week as profit taking pressures hit overseas investors, leaving the majority of our regional strategies in shallow red territroy. Year-to-date, the best performing strategy remains the Global Titans Portfolio while the new laggard is the LatAm Centric Portfolio.